Most homebuyers get one or two quotes and go with whoever they talked to first. That's a costly mistake. Here's how to do it right.
Get at least 3 quotes
Freddie Mac research found that getting just one additional rate quote saves borrowers an average of about $1,500 over the life of the loan — and about $3,000 with five quotes. Over 30 years, even a 0.25% rate difference on a $350,000 loan (say, 6.5% vs. 6.75%) is about $20,800. The effort of making a few calls is worth it.
Credit inquiries won't hurt you if you shop fast
Multiple mortgage inquiries within a 14-45 day window (depending on the credit scoring model) count as a single hard inquiry. So you can get 5 lender quotes in two weeks and it only dings your score once. Don't let this stop you from shopping.
Compare APR, not just the interest rate
The APR includes the interest rate plus lender fees, so it gives you a better apples-to-apples comparison. A loan with a 6.5% rate and $5,000 in fees might be more expensive than one at 6.75% with $0 in lender fees, depending on how long you plan to stay.
Don't forget about points
Discount points let you pay upfront to buy down your rate. One point = 1% of the loan amount and typically lowers your rate by 0.25%. Whether that's worth it depends on how long you plan to keep the loan.
Rates change daily and vary by lender, loan type, credit profile, and property. Lock your rate when you're ready to commit — don't wait for rates to drop unless you can afford to be patient.